ITO, WD-8(3), KOLKATA, Kolkata V. M/s Rightex Commerce Pvt. Ltd., Kolkata

ITA 510/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9412 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-03-2014
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ADDITI ONAL
• Assessee Lawyers: SUNIL SURANA F
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

I.T.A. NO. 510/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 510/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 INCOME TAX OFFICER,................................ ...........................................APPELLAN T WARD-8(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. RIGHTEX COMMERCE PVT. LIMITED,................ ............................RESPONDENT SURANA MANSION, 3 RD FLOOR, 7/1/C, LINDSAY STREET, KOLKATA-700 087 [PAN: AABCR 4972 N] APPEARANCES BY: SHRI SALLONG YADEN, ADDITIONAL CIT (D.R), FOR THE DEPARTMENT SHRI SUNIL SURANA, F.C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 24, 2017 DATE OF PRONOUNCING THE ORDER : FEBRUARY 03, 2017 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 01.01.2014 WHEREBY HE DELETED THE DISALLOWANCE OF RS.51,79,408 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FO R BAD DEBTS WRITTEN OFF. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRADING OF MISCELLANEOUS GOODS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 23. 03.2011 DECLARING TOTAL INCOME OF RS.14,30,240/-. IN THE PROFIT & LOSS ACCO UNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.51,91,254/- WAS DEBITE D BY THE ASSESSEE ON ACCOUNT OF BAD DEBTS WRITTEN OFF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR THE DEDU CTION ON ACCOUNT OF BAD I.T.A. NO. 510/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 4 DEBTS WRITTEN OFF WAS EXAMINED BY THE ASSESSING OFF ICER. ON SUCH EXAMINATION, HE FOUND THAT THERE WAS A FAILURE ON T HE PART OF THE ASSESSEE TO ESTABLISH THAT THE CONCERNED DEBTS WRITTEN OFF A S BAD HAD ACTUALLY BECOME BAD DURING THE YEAR UNDER CONSIDERATION. ACC ORDING TO HIM, THE ASSESSEE EVEN AFTER THE AMENDMENT MADE IN SECTION 3 6(1)(VII) WITH EFFECT FROM 1 ST APRIL, 1989 WAS UNDER AN OBLIGATION TO ESTABLISH T HAT THE RELEVANT DEBTS HAD ACTUALLY BECOME BAD IN ORDER TO CLAIM DED UCTION AND SINCE THIS CONDITION, ACCORDING TO THE ASSESSING OFFICER, WAS NOT SATISFIED BY THE ASSESSEE, HE DISALLOWED THE CLAIM OF THE ASSESSEE F OR DEDUCTION ON ACCOUNT OF BAD DEBTS WRITTEN OFF IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 26.03.2013. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON A CCOUNT OF BAD DEBTS WRITTEN OFF FOR THE FOLLOWING REASONS GIVEN IN PARA GRAPH NO. 4 OF HIS IMPUGNED ORDER:- 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E WRITTEN SUBMISSION FILED BY THE ASSESSEE. THE ASSES SING OFFICER HAS NOT DISPUTED THE FACT THAT THE BAD DEBT WAS DUL Y WRITTEN OFF BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. THE HON'B LE SUPREME COURT HAS SET AT REST THE INTERPRETATION OF SECTION 36(1)(VII) IN THE CASE OF TRF LTD. VIS. CIT RANCHI 323 ITR 397 WH EREIN IT HAS BEEN HELD THAT AFTER AMENDMENT OF SECTION 36(1)(VII ) W.E.F. 01.04.89 THE CLAIM OF BAD DEBT IS TO BE ALLOWED ONC E IT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. AFTER THE AME NDMENT IT IS NOT REQUIRED FOR THE ASSESSEE TO PROVE THAT THE DEB T HAS BECOME IRRECOVERABLE. THE ASSESSING OFFICER HAS RELIED ON THE JUDGMENT ALL OF WHICH PERTAINS TO PRE-AMENDMENT PERIOD EXCEP T THE JUDGMENT IN THE CASE OF SOUTH INDIA SURGICAL 153 TA XMAN 491 (MADRAS). HOWEVER THE AFORESAID JUDGEMENT WAS DELIV ERED BEFORE THE JUDGEMENT IN THE CASE OF TRF LTD. BESIDE S IN THE CASE OF FIRST LEASING CO. 341 ITR 641, THE HON'BLE MADRA S HIGH COURT ITSELF HAS NOT ACCEPTED THE JUDGMENT IN THE CASE OF SOUTH INDIA SURGICAL ON THE GROUND OF APPLICABILITY OF JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. BESIDES, IT H AS BEEN HELD IN THE CASE OF ANIL H. RASTOGI ITAT(TM) 86 ITD 193, BAD DEBT EVEN IF THAT RELATES TO THE SAME YEAR, IF THE ASSES SEE HAS WRITTEN OFF THE DEBT OR PART THEREOF IN THE ACCOUNTS IN THE PREVIOUS YEAR I.T.A. NO. 510/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 4 ITSELF, SUCH BAD DEBT SHALL BE ALLOWED AS DEDUCTION . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R HAS NOT DISPUTED THE FACT THAT THE AMOUNT WAS WRITTEN OFF D URING THE RELEVANT PREVIOUS YEAR AND THE FACT THAT THE SAME W AS DEBT AND THE FACT THAT THE SAME WAS DEBT OF THE BUSINESS. TH EREFORE, IT WAS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THA T THE DEBT HAS BECOME IRRECOVERABLE. ONLY REQUIREMENTS ON THE PART OF THE APPELLANT WERE TO WRITE OFF THE SAID DEBT IN THE BO OKS OF ACCOUNTS WHICH HAS NOT BEEN DISPUTED BY THE ASSESSI NG OFFICER. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT IN T HE CASE OF TRF LIMITED 323 ITR 397, THE DISALLOWANCE OF RS.51, 79,408/- ON ACCOUNT OF BAD DEBT MADE BY THE A.O. IS DELETED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES, THE ISSUE INVOLV ED IN THIS APPEAL OF THE ASSESSEE IS SQUARELY COVERED IN FAVOUR OF THE ASSES SEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LIMITE D REPORTED IN 323 ITR 397, WHEREIN IT WAS HELD THAT AS PER THE AMENDED SE CTION 36(1)(VII) WITH EFFECT FROM 01.04.1989, THE CLAIM OF BAD DEBT IS TO BE ALLOWED ONCE IT IS WRITTEN OFF IN THE BOOKS OF ACCOUNT AND IT IS NOT R EQUIRED FOR THE ASSESSEE TO PROVE THAT THE DEBT WRITTEN OFF AS BAD HAS ACTUA LLY BECOME IRRECOVERABLE. RESPECTFULLY FOLLOWING THE SAID DEC ISION OF THE HONBLE APEX COURT, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF BAD DEBTS WRITTEN OFF AND DISMISS THIS APPEAL OF TH E REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 03, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 3 RD DAY OF FEBRUARY, 2017 COPIES TO : (1) INCOME TAX OFFICER, I.T.A. NO. 510/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 4 WARD-8(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. RIGHTEX COMMERCE PVT. LIMITED, SURANA MANSION, 3 RD FLOOR, 7/1/C, LINDSAY STREET, KOLKATA-700 087 (3) COMMISSIONER OF INCOME TAX(APPEALS-VIII, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.